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1. Introduction
This chapter is concerned with examining the role of web technologies across the field of
supply chains and supply chain management (SCM). Supply chains and SCM are growing
concerns for organisations as customers become more demanding, cost reduction is
becoming more and more important and supply chains are increasingly complex as
globalisation and the use of global partners becomes greater.
Supply chains embrace all those processes involved in creating and delivering products and
services. They can be characterised as networks of processes and activities that “perform the
function of product development, procurement of material from vendors, the movement of
materials between facilities, the manufacture of products, the distribution of finished goods
to customers, and after-market support for sustainment” (Mabert & Venkatraman, 1998,
p538). The inputs that are used in an organisation’s supply chain may pass through the
supply chains of many suppliers or manufacturers on their way to the organisation and
outputs from an organisation may pass through many distributors, retailers or customer’s
supply chains before it reaches the final customer (Ward & Peppard, 2002). This can be
referred to as a supply chain network (SCN). Supply chains and SCNs have become an
integral part of an organisation’s strategy. As such, organisations have become increasingly
interested in the use of web technologies for strengthening supply chains and improving
information sharing, collaboration and the responsiveness of their supply chains.
This chapter will examine the developments in web technology over the last 20 years and
more recently the emergence of e-commerce, e-business, mobile commerce and web 2.0. It
will explore the application of web technology to supply chains and SCNs, its role in
transforming business processes, and in particular for collaboration, integrating business
processes and developing visibility and information sharing across SCNs. It will highlight a
range of challenges related to the use of web technology for supply chains and supply chain
management such as trust, security, social and cultural issues and depersonalisation and the
chapter will close by discussing future trends in supply chains and developments in web
technologies.
strategies, business models, supply chains and business processes. It is an exciting field that
offers many new opportunities but poses many different challenges (Li, 2007).
Furthermore, organisations are employing web technologies for allowing selected users
outside the organisation to access parts of the intranet eg suppliers, customers or business
partners. Extranets use the Internet to link multiple intranets and provide secure
connectivity between corporation’s intranets and the intranets of its business partners,
materials, suppliers, financial services, government, and customers (Turban et al, 2010).
Extranets can be used for supporting supply chain management and activities involving
external partners such as procuring materials from suppliers, processing orders and
delivering customer service. Dell Computers provide access to their extranet to suppliers
and customers alike. Demand forecasting is shared with suppliers whilst customers can use
the extranet for entering orders, monitoring the progression of deliveries and accessing
customer support and sales reps provide customised presentations about products to
business customers. Customers, suppliers and employees of Boeing use an extranet to do
everything from perusing company maps to ordering plane parts.
The Internet
Extranet
Intranet
The
Company The
World Suppliers, Only Suppliers, World
customers,
customers,
collaborators collaborators
Fig. 1. Relationship between intranets, extranets and the Internet, Source: Chaffey (2010)
Moreover, there are many tools and technologies that have been developed with internet
technology as the supporting platform which further enhance communication and provision
of information. These include applications such as electronic mail, search engines, portals,
collaborative tools, electronic data interchange (EDI), database management systems
(DBMS), enterprise resource planning (ERP) systems, supply chain management systems,
geographical information systems (GIS), radio frequency identification (RFID) tags, wireless
and mobile technologies and more recently, web 2.0 technologies. Some of these will be
expanded upon in the following sections.
EDI involves the electronic exchange of structured business documents in a standard format
between trading partners. It has had many applications and has been used to share
documents such as invoices, orders, products specifications and bill of ladings between
organisations. It is used extensively within many industries including automobile, consumer
goods, transport, retail, chemicals, electronics and health. Supermarkets have used it to
order goods to restock shelves and car manufacturers have used it to invoice dealerships.
More recently, though, organisations have started to use the Internet as a channel for EDI as
it can be implemented at lower costs. The Internet also supports and enhances EDI in a
number of additional ways including the ability to send e-mails with EDI, enabling direct
input of information from internet pages and being able to map the contents of an EDI
message to an Internet site. This is particularly useful for smaller to medium sized
organisations in the supply chain.
and workflow systems. They can collectively support collaboration within an organisation
and between organisations.
For example, audio conferencing (which supports the transmission of audio data) and
videoconferencing (which supports the transmission of live video) can be used in
conjunction with shared whiteboard applications to allow two or more people to work on an
activity collaboratively from different locations.
Workflow management systems allow documents to be routed through organisations and
provide facilities for routing forms, assigning tasks and privileges and monitoring tasks.
They are regularly used for supporting supply chain processes eg raising a purchase order,
submitting a holiday request, processing a customer complaint. These types of systems
ensure that information is directed to the relevant person responsible for completing the
next business activity and it is completed in a timely fashion.
Wireless internet access and mobile devices provide easy access to the Internet, www,
intranets, extranets and specific tools and applications. They are extremely popular due to
the flexibility and freedom they offer. Employees can communicate from many more
different places at convenient times eg employees can work from different locations,
salespeople can access company systems when they are at customer premises. They also
offer great potential for reaching customers as is evident from research by Wireless
Intelligence (2008) which found that by the end of 2007 there were 2 billion subscriber
connections (representing half the planets population). Also, mobile phone tracking allows
the position of a mobile phone to be tracked even when a user is not on a call. This can
benefit organisations who can market products to customers when they are on the move
and within the locality of their business. On the downside, the channel capacity in wireless
networks can be lower and issues such as security can be exacerbated.
connecting with other people. It supports a more socially connected society and builds on
characteristics such as openness, participation, cooperation, community and collaboration.
Web 2.0 necessitates a shift in the philosophy of society to one where we aren’t just using the
Internet as a tool – but we are becoming part of it.
There are a number of areas that web tools and technologies can be used to enhance supply
chain communication. The types of supply chain activities that web 2.0 may be particularly
beneficial to include activities such as marketing and advertising; collaborating and
strengthening relationships with customers and suppliers, information and knowledge
transfer; delivering added value to products and services; networking and research.
Examples of specific supply chain applications are provided in Table 1.
Blog Blogs can be used for internal and external communication. For
example, they can be used for delivering news on business
developments, showcasing products and services, sharing expert
advice, opinions and frequently asked questions (FAQ),
gathering customer feedback and building a loyal customer base.
Wiki Wikis can support organisations in document sharing and
collaboration and for encouraging communication, knowledge
transfer and collective intelligence amongst people involved in
supply chain.
Forum/Discussion Forums or discussion boards can be used to make business
Board connections, share information, exchange views and seek advice
on business-related matters where companies may lack the
expertise.
Really Simple RSS make it more efficient for organisations/people to check for
Syndication (RSS) new content on the web. As new content appears on relevant
Feed internal and external websites, the user is updated and the
information is delivered. This is useful for market research and
information/knowledge transfer.
Social Networking Social Networking sites are particularly useful for organisations
adverting products, providing links to company websites,
increasing brand awareness, gathering customer feedback on
advertised products and building a loyal customer base.
Multimedia Sharing Multimedia sharing tools and technologies may be used for
sharing audio, photos, videos, presentations and
documentations. In particular organisations use them for
showcasing their products and services or sharing images and
videos of best practice across the supply chain.
Tagging & Social Tagging and social bookmarking can provide organisations with
Bookmarking a means for categorising, classifying and bookmarking content
and valuable information on the web. These collectively could
support gathering business intelligence and undertaking market
research.
Table 1. Web 2.0 Tools & Supply Chain Applications
468 Supply Chain Management - New Perspectives
Web technologies have evolved greatly over the last 20 years. Key advantages of web 2.0
applications lie in the potential they offer for establishing more interactive and participative
business connections and collaborations. They can be used to build communities based on
interest, purpose or practice between business partners, regardless of location. They also
offer greater opportunities for customer-centricity as customers are encouraged to openly
feedback and share thoughts, experiences and ideas (Wagner & Majchrzak, 2007).
complex related set of activities. Equally the scope of the supply chain process may involve
one department within an organisation or it may involve a range of organisations such as
suppliers, manufacturers and customers. It is important for an organisation to identify and
focus on its key supply chain processes as they will have the biggest influence on the overall
supply chain. In particular, the Global Supply Chain Forum identified eight key supply
chain processes that make up the core of a typical manufacturing company. These included:
customer relationship management; customer service management; demand management;
order fulfilment; manufacturing management; procurement; product development and
commercialization; and returns. However depending on the nature of the organisation and
the type of industry that the organisation operates in, the key supply chain processes may
vary.
The accomplishment of core supply chain processes majorly influences the performance of
the overall supply chain. Consequently, organisations have been seeking ways to improve
or transform these supply chain processes in terms of: productivity; efficiency; customer
satisfaction; cycle time; cost; quality; speed; flexibility and competitive advantage. Business
improvement methodologies such as Six Sigma Methodology have been employed whilst
other organisations have pursued more radical redesign of business processes using
Business Process Reengineering.
Technologies have played a major role in the development and transformation of supply
chain processes in recent years. The proliferation of the new telecommunications and IT
such as the client/server concept, the Internet, intranets and the www has led to the
automation and the integration of many supply chain processes and has made real time on-
line communication throughout the supply chain a reality.
Cagliano, Caniato and Spina (2003) placed the adoption of web technologies across supply
chain processes into three main categories including: e-commerce (sales, customer service &
support); e-procurement (purchasing activities); e-operations (order processing, tracking,
production planning & scheduling, inventory management, transportation planning). Early
adopters focused on e-commerce initially. This tended to be followed by e-procurement and
more recently e-operations. The following sections provide examples of the application of
web technologies across specific supply chain processes.
4.1 E-Procurement
Procurement broadly entails a company’s requisitioning, purchasing, transportation,
warehousing and in bound-receiving process. More specifically purchasing can involve:
identifying user need for a product; evaluating potential suppliers; bidding, negotiating and
selecting suppliers; approving purchases; releasing and receiving purchase requirements;
and measuring supplier performance.
E-Procurement essentially involves the application of web technologies to the procurement
activities of an organisation. Typically this will involve technologies such as ERP systems,
stock control systems, e-catalogues, e-mail, EDI, document management software, workflow
systems and accounting systems. There have been many drivers for e-procurement
including uncontrolled spending, the processes being very time consuming, costs far too
high and organisations using too may suppliers.
The potential impact of e-procurement on competitiveness and profitability is huge as
business to business procurement can involve one of the largest costs for an organisation.
Some organisations spend 50 to 60 percent of their revenue on buying goods and services.
Web Technologies and Supply Chains 471
There are many benefits associated with e-procurement such as cost reduction, reduced
inventory levels, improved cycle time, enhanced strategic sourcing and corporate–wide
purchasing reporting.
Many companies recognise these benefits and have developed procurement systems.
Motorola, for example, developed a procurement system based around an ARIBA web
based procurement system and linked to an their oracle financial system, signature
authorisation tool, workflow system, EDI and e-mail. The procurement system handled
everything from the requisition stage through to the payment stage. The system has
streamlined and speeded up the whole process, provided transparency, allowed more
controlled spending and made substantial cost savings.
6.1 Collaboration
A variety of forces have led to a greater need for stronger collaboration between
organisations within SCN. Customers are demanding faster, more specialised responses and
organisations need to work more closely together in order to streamline and improve the
efficiency of the SCN and be more effective in matching demand with a suitable level of
supply.
Lambert et al (1996) suggest that there are different degrees of collaborative relationships
among supply network members ranging from arm’s length relationships, partnerships to
vertical integration. Partnerships are becoming increasingly common for strengthening
collaboration across supply networks. They involve a degree of joint planning, joint
commitment, mutual trust, openness, shared risk, shared rewards, information exchange,
operating controls across organisations and corporate culture bridge-building (Cooper et al,
1997). Partnering provides a way of strengthening supply network integration, exploiting
unique expertise of each partner, taking advantage of profit making opportunities and
providing sustainable competitive advantage that will enable them to ‘lock out’ competitors
(Lambert, Emmelhainz & Gardiner, 1996).
The duration, breadth, strength and closeness of partnerships will vary between supply
network members and probably over time. Factors that will affect the degree of partnership
474 Supply Chain Management - New Perspectives
that should be established with other supply network members are whether or not they will
be involved with the supply members on a long term or short term time basis, whether or
not they are core to the functioning of the organisation and whether or not they contribute
to the strategic outcomes of the organisation.
Web technologies have provided many opportunities for widening the scope of inter-
organisational and intra-organisational relationships. They offer the flexibility for
establishing new collaborations with different suppliers, customers, logistic providers and
partners and different tiers of suppliers and customers. For example, organisations can now
interact with globally dispersed suppliers that were not possible before due to logistical and
practical reasons and organisations can provide electronic customer service and support to
medium and smaller sized organisations that it was either too costly or impractical to
service in the past face to face. Moreover, organisations can more easily pursue on-line
interactions with suppliers and customers that are not in adjacent tiers in the supply
network. For example, organisations may collaborate with suppliers a couple of tiers
removed on supply chain management issues such as demand replenishment for particular
products or the design of a specific product. Furthermore, some organisations are cutting
out a couple of tiers completely between them and their end consumers and conducting
sales, marketing and customer service and support directly.
There are also opportunities for using web technologies to enable globally dispersed people
to collaborate on particular supply chain activities. For example, Testing Engineers within
the UK division of Sun Microsystems can now collaborate electronically with Testing
Engineers in the USA. In the past these employees may have communicated occasionally on
the phone but now they can actually benefit from the advantage of being able to establish
and develop a formalised virtual team. This allows organisations to leverage a greater pool
of knowledge and develop higher quality products or service. On-line collaboration allows
greater flexibility for establishing relationships, interacting and pooling resources.
6.2 Integration
The overall aim of supply chain management is to create value for end customers and
organisations in the SCN. In order to accomplish this, organisations need to consider
integrating supply chain processes internally and externally with other organisations in the
SCN.
Technology can be used to improve the efficiency of individual processes but often the real
costs savings are achieved through integrating different processes together. Process
integration can reduce customer lead times, reduce inventory, speed of decision making and
transactions in ways that are not feasible through focusing on individual process. Currently,
the primary enabler of supply chain integration is the Internet which enables many different
systems, tools and technologies to be fully integrated into a common network. ERP systems,
SCM systems, EDI systems, financial systems, procurement systems, customer service and
support systems, document management systems, decision support tools, project
management tools and database management systems can be integrated and information
can be shared between the different systems.
Integration should begin with internal processes (front and back end supply chain
processes) and then extended externally to customers and suppliers. Initially external
integration should begin with first tier supplier and customers or critical trading partners
but over time this can be extended to 2nd and 3rd tier suppliers and customers and in some
Web Technologies and Supply Chains 475
case organisations may even support a degree of integration between suppliers and
customers. Integration will allow employees to better coordinate supply chain activities and
share information and resources. The impact that a decision in one part of the supply chain
can have on another part of the supply chain will become much more visible and
transparent.
7. Challenges
There are a range of challenges that are directly related to the use of web technologies across
supply chains and supply chain management and may potentially affect the impact of web
technologies for supporting and building collaborative supply networks. Amongst these
challenges is trust, security, social and cultural issues and depersonalisation. Supply chain
managers should identify these challenges and take measures to reduce or eliminate them.
476 Supply Chain Management - New Perspectives
7.1 Trust
Trust majorly influences whether or not collaborative partners openly communicate and
willingly share information using the web technology. If one party suspects that the other
party will take advantage of them or use information against them there is likely to be a
reluctance to work together and share information.
Trust is something that generally grows over time and will take time and effort to build up
between business partners.
The parties involved need to agree common goals, clear guidelines and monitoring methods
and there needs to visibly be clear and equal benefits in collaborating with each other.
“Ethical behaviour comes down to business partners setting expectations initially about the
relationship and data sharing and then meeting these expectations” (Wisner et al, 2005).
7.2 Identity
There is also concern that widespread use of technology across supply chains may lead to
depersonalision of inter-organisational relationships across the SCN. Regular use of web
technology can make it difficult to build cohesive and strong bonds with business partners
and consequently trickier to collaborate on activities, integrate business processes, be
creative with each other and maintain open communication.
A level of identity and personalisation is crucial for the effective formation and functioning
of business partnerships. Identity plays a critical role in developing a level of commitment
between the business partners, understanding the meaning and getting the most from the
communication that is taking place and enabling the interaction to be more effective.
Research suggests that business partners actively using web technology for communicating
should maintain a strong level of identity through periodic face to face interactions, regular
communication and periodic social interactions. Stronger bonds with business partners will
ensure that partners are more likely to ‘go the extra mile’ in the future when there are
supply chain issues or complexities.
7.3 Security
Supply chains are of critical importance to the success of organisations and by making supply
chain processes and key business information available on the web, organisations are making
themselves vulnerable. Security is one of the most important issues or challenges affecting
supply chains supported by web technology. It is an ongoing concern for all organisations and
in particular for those organisations using the Internet for developing inter-organisational
linkages. Organisations are sharing a lot of important business information eg payments, client
lists, network contacts, finance, orders up and down the SCN.
There are many security threats facing organisations ranging from viruses, phishing,
hacking, spam, fraud, identity theft to web vandalism and levels of security are being
threatened even further through the uptake in wireless and mobile usage, web 2.0
technology and cloud computing.
Organisations within the supply chain will need to have clear frameworks in place for
ensuring a high level of security. Security frameworks are likely to embrace areas such as
encryption, authentification, firewalls, regulatory compliance and backup systems. The
security frameworks should be well communicated to business partners so that on the one
hand they also take appropriate security measures but on the other hand, they have the
confidence that inter-organisational networks are secure enough to share business
information.
Web Technologies and Supply Chains 477
8. Future issues
There are a number of future developments within the field of supply chain management
that organisations should be aware of when they are developing web technology across
their supply chains and SCN in the future. The Future Supply Chain 2016, published by the
Global Commerce together with Capgemini, identifies an array of sustainable paramaters
that organisations will need to take into account in their future supply chains including
areas such as “continuing to delight customers”, “carbon emission”, “urban restrictions”,
“sustainability”,” customer satisfaction”,” supply chain performance”, “financial”, “external
factors eg price changes”, “information technology”, “visibility”, “working together”,
“collaboration”, “transparency” and “networking”. These parameters will have an impact
on the design of future supply chains. Issues such as collaboration, networking, working
together, visibility and transparency will continue to be at the forefront of competitive and
innovative supply chains. Some further issues which are emerging will be discussed, in
relations to web technology, under the following headings: globalisation; cost reduction;
green issues; technological developments.
8.1 Globalisation
A growing trend in the field of supply chain and supply chain management is globalisation.
Organisations are increasingly expanding into new marketplaces, using foreign suppliers,
dealing with foreign customers, handling a greater number of tiers of global suppliers and
customers and accessing the services of global SCN services. In essence, this means that SCN
478 Supply Chain Management - New Perspectives
are becoming even more complex and difficult to manage. However, web technologies can
provide opportunities for supporting the process of globalisation, enabling integration and
visibility of information and maintaining communication with global suppliers, customers
and logistic providers. The web offers opportunities for maintaining 24 hour communication
and service across different parts of the world although online services/systems may need
to be tailored to suit different countries to take into account different languages, product
requirements, website layout, promotional offers and so on.
Another area under development is the use of more high-powered graphics. Already virtual
worlds have emerged (eg second life) and it is likely that 3D graphics will be integrated as
part of the web. This could provide organisations with the capability to display documents,
including the links between them, in three dimensions and could be useful when working
on a business activity or task. High powered graphics could also enhance the richness of
communication with customers and suppliers by adding a high degree of visualisation and
sophistication.
Organisations need to remain technologically aware and be continually searching for new
and innovative supply chain applications.
9. Conclusion
This chapter has covered a range of issues associated with the application of web
technologies to supply chains. The chapter began with an account of the evolution of web
technology since the Internet began through a military project commissioned by the US
Department of Defence in 1969. The Internet developed dramatically since
commercialisation in the early 90s and has given rise to the proliferation of intranets and
extranets and supports technologies such as EDI, ERP, collaborative tools and RFID. Mobile
and wireless technologies have enabled easier access to the Internet and current web
developments such as richer internet applications and web 2.0 have lead to greater
interaction, collaboration and participation on the web.
The chapter then explored ways in which the Internet has been applied across businesses in
terms of e-commerce, e-business and m-commerce and across key supply chain processes
that make up the overall supply chains. Examples were provided such as inventory
management, customer relationship management and transportation. More revolutionary is
the fact that web technologies are being used for enhancing and transforming supply chains
through building stronger collaborative links, integrating internal and external supply chain
processes, supply chain visibility and real time information exchange.
There are many challenges that may hamper the use of web technologies across supply
chains such as trust, identity, security and social and cultural challenges and finally, there
are a number of future developments such as globalisation, cost reduction, green issues and
further technological developments that must be taken into account.
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